In a recent report titled “The recovery will be digital” McKinsey forecasts that the post-COVID recovery will be a digital one.
The report specifically talks about Industry 4.0, that is, industry enabled by technological innovations will be at the forefront of economic recovery.
“Data, computational power, and connectivity, such as sensors, the Internet of Things, cloud technology, and blockchain,” the report says.
3 Key Blockchain Insights
Of the three key insights into the blockchain future, McKinsey points out that to realize the strategic value of Blockchain, we have to realize that “Blockchain does not have to be a disintermediator to generate value, a fact that encourages permissioned commercial applications.”
This is a great insight in terms of gaining cooperation from the established businesses to take Blockchain mainstream.
The other two insights include:
“Blockchain is still three to five years away from feasibility at scale, primarily because of the difficulty of resolving the “coopetition” paradox to establish common standards.”
And that, “Blockchain’s short-term value will be predominantly in reducing cost before creating transformative business models.”
Blockchain use cases address two major needs
In opining about the use cases of Blockchain, the report lists 6 uses cases which address two major needs.
The 6 use cases alluded to in the report are: 1) Static registry; 2) Identity; 3) Smart contracts; 4) Dynamic registry; 5) Payments infrastructure; 6) Other
The two major needs that these use cases address are:
- i) Record keeping: Storing static information
- ii) Transactions: Registry of tradeable information
Blockchain’s strategic value is ‘cost reduction’
We see that the blockchain’s impact will be different based on the industry. While the technology can help increase the revenue in some industries, it helps reduce cost in others.
Overall, blockchain holds the potential to reduce costs in many industries as seen in the chart below.
As seen in the chart above, blockchain also has the potential to drive social value in industries like Agriculture.
A major shift in the way we work is coming
The report talks about how there will be a lot of jobs that will be replaced by machines, especially those that involve data collection and predictable ‘physical’ tasks.
As we start relying on more and more things on machines, the need for an underlying secured platform becomes imperative.
Blockchain can address the ‘how do I trust machines’ dilemma by the very nature of its security and immutability layers.
No one knows what the world will look like after the COVID or answers to these questions:
Will we have jobs that we had before the pandemic started?
Will there be a V, W, L or K shaped recovery?
One thing is becoming clearer by the day and that is that the technology will pave the way forward.
Blockchain could be a direct beneficiary of a world embracing a technological future.
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